How Much Homeowners Insurance Do I Need?
Finding the right homeowners insurance is simpler than it seems—start with your home’s rebuild cost, your belongings, and the protection you need for everyday risks.
How much homeowners insurance do I need?
You should have as much homeowners insurance as you can reasonably afford. Your homeowners policy can keep you and your assets protected in a number of different situations. As such, it’s important to know your coverage limits so you aren’t caught off guard.
In the following guide, we review common coverage types and situations in which you may need to increase coverage.
- Dwelling: square footage × local rebuild cost per sq. ft.
- Personal property: 50–70% of dwelling coverage
- Liability: at least $300,000 (consider $500,000+)
- Living expenses: 20–30% of dwelling coverage[1]
These are starting points—an agent can help tailor coverage to your needs.
What home coverage options are available?
In some cases, the type of home you own helps to determine the best type of coverage for you. Most homeowners insurance companies offer different tiers of coverage.
These are broken down as follows:
- HO-1 (basic form): The most basic form that only covers against ten named perils.
- HO-2 (broad form): This named peril policy is only slightly more robust than an HO-1.
- HO-3 (special form): The most common policy, this covers your dwelling on an open peril basis.
- HO-5 (comprehensive form): The most robust form, this covers your dwelling and personal belongings on an open peril basis.
- HO-8 (modified form): A policy for architecturally significant or older homes that may be more difficult to insure.
The table below shows the average limits found on most homeowners policies. Remember that if you have extenuating circumstances, such as specific items you want extra coverage for, there is likely an endorsement you can add to help with peace of mind.
| Coverage Type | Typical Limit of Coverage |
|---|---|
| Dwelling (Coverage A) | Varies |
| Other structures (Coverage B) | 10% of Dwelling Coverage |
| Personal Property (Coverage C) | 50% of Dwelling Coverage Limit |
| Loss of Use (Coverage D) | 20% of Dwelling Coverage Limit |
| Personal Liability (Coverage E) | Varies |
| Medical Payments (Coverage F) | Varies |
How much dwelling coverage do I need?Â
This part of your homeowners insurance covers your primary dwelling and will pay to repair or rebuild the structure of your home and any attached buildings. Most home insurance companies require you to carry coverage that is at least 80% of the dwelling’s replacement value, otherwise, they won’t fully cover the damage.
If your house costs $150,000 to replace, you would need to carry insurance in the amount of at least $120,000 in order to be fully covered at 80%. Verify this with your insurance company, as some insurers require insurance at 100% of a home's replacement cost. Remember that replacement value is not the same as market value, which incorporates the value of the land itself, as well as other factors.
First-Time Homeowners Insurance
Learn what info you need to get home insurance quotes, the steps to keep in mind and the average cost of insurance to kickstart the process of finding a policy.
How much personal property coverage do I need?
Your personal property coverage is what protects your personal belongings. The coverage limits are often a percentage of your dwelling coverage, usually around 50%. This means that a home insurance policy with $300,000 in dwelling coverage would provide somewhere in the neighborhood of $150,000 in personal property coverage.
For items that are particularly valuable — such as fine art or expensive jewelry — limits are often quite restrictive. For such items, you may also want to consider a scheduled property endorsement. This allows you to increase the limits of your coverage so that they reflect the higher value of rare or collectible items.
Keep in mind that some items that you may assume to be covered may not be. Many of the systems in your home, for instance, are oftentimes not covered. HVAC units and hot water heaters are two common home features that may not be covered. As these items can be very costly to replace, you may want to consider an equipment breakdown coverage endorsement.
Ultimately, compiling a home inventory and speaking to your insurance agent about which items are covered is the best way to get the amount of insurance coverage you need.
Feel confident about saving without sacrificing coverage.
How much personal liability coverage do I need?
The amount of personal liability coverage you need depends on your individual situation. Personal liability protects you if you are found responsible for property damage or the bodily injury of another party. As such, some people are innately more at risk than others. For instance, certain professions can be more susceptible to lawsuits. Furthermore, owning an attractive nuisance — such as a swimming pool or a trampoline — can also increase your need for more liability coverage. Most companies will allow you to increase this limit for an additional premium.Â
Those who require excess personal liability coverage will want to think about which home insurance company they choose from the outset, as offerings may be quite different from one company to another. For instance, some premier insurance carriers — such as PURE, Chubb, or Cincinnati Insurance Company — provide higher liability insurance coverage as a standard offering, with some extending coverage levels to tens of millions of dollars.Â
Umbrella insurance
If you need higher liability coverage limits, you could also consider adding an umbrella policy. An umbrella policy adds extra liability coverage on top of your policy’s standard liability limits. It’s not uncommon for umbrella coverage amounts to be $1 million or more.Â
Additional home coverages
Included in your policy are a number of other coverages. Bear in mind that most of these coverage limits can be dependent on the amount of your dwelling coverage.
Other structures: This covers buildings on your property not attached to your primary dwelling, such as a tool shed or free-standing garage. Usually 10% of your dwelling limit.Â
Additional living expenses: Usually 20-30% of your dwelling coverage, meaning that a $200,000 home would have somewhere in the neighborhood of $40-$50,000 available.Â
Medical expenses: This coverage pays for injuries that others suffer on your property. It is usually available in amounts between $1,000 and $5,000, though these may be able to be increased for an additional premium.
Actual cash value vs. replacement cost
When you file a claim, your payout depends on how your policy is written.
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Actual cash value (ACV): Pays the depreciated value of items, factoring in age and wear. It’s uncommon for a primary dwelling, but some basic policies (HO-1 or HO-2) may use it.
-
Replacement cost (RCV): Pays the full cost to repair or replace your home or belongings with new items of similar kind and quality.
-
Extended replacement cost: Adds extra coverage (often 10–25%) to account for rising construction or material costs.
Keep in mind: replacement cost is not the same as market value. It’s based on the size and materials of your home, not the land or location.
💡 For the most protection, replacement cost — or extended replacement cost — is usually the better choice.
Additional coverage for natural disasters
While certain natural disasters are typically covered — such as windstorms and even hurricane winds in some cases — most insurance companies put limits on certain perils. Furthermore, you could also face an entirely separate deductible if filing a claim related to a natural disaster. Below are some of the most common perils for which you may need to seek out separate coverage:
- Flood: Flood insurance is almost never offered by standard insurance companies. Most policies can be purchased through the NFIP.Â
- Earthquake: Earthquake insurance is available in certain states, though coverage can vary state by state.
- Wildfire: While fire is a covered peril in most cases, wildfires can be treated differently by insurance companies. In states susceptible to wildfire, some companies may exclude them from your coverage. There are often a number of ways to add this coverage.Â
Choosing your home insurance coverage
Your home is one of your biggest investments, so it’s important to insure it properly. Make sure your policy limits cover rebuilding costs, liability risks, and the value of your belongings. The right amount of coverage should fit both your needs and the risks in your area.
If cost is a concern, comparing policies can help you find the best balance of price and protection. The Zebra makes it easy to get free quotes and see your options side by side—just enter your ZIP below to get started. You can also reach out to our expert agents to talk through your individual needs and look at options.
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Home coverage FAQs:
How much homeowners insurance do I need? Insurance Information Institute
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